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Middlefield Banc Corp. Reports Second Quarter 2011 Results

Middlefield Banc Corp. 2011 Press Releases

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Contact Info: James R. Heslop, 2nd
Middlefield Banc Corp.
Executive Vice President/Chief Operating Officer
440.632.1666 Ext. 3219
Date: August 4, 2011

Middlefield Banc Corp. (OTCQB:  MBCN) today announced results for the second quarter of 2011.  Net income totaled $720,000 for the quarter ended June 30, 2011, representing earnings per diluted share of $0.44.  In comparison, earnings per diluted share were $0.45, on net income of $715,000, for the second quarter of 2010.

Net income for the first six months of 2011 was $1,722,000 or $1.10 per diluted share.  For the same period of 2010, net income of $1,360,000 equated to $0.87 per diluted share.

Annualized returns on average equity ("ROE") and average assets ("ROA") for the 2011 second quarter were 7.22% and 0.45%, respectively, compared with 7.48% and 0.47% for the second quarter of 2010.  ROE and ROA were 8.89% and 0.55%, respectively, for the six month period of 2011.  Comparable results for the 2010 six month period were 7.27% and 0.46%, respectively.

"We are pleased with our earnings position for the second quarter of 2011," stated Thomas G. Caldwell, President and Chief Executive Officer, "This is especially true as we seek to navigate through a very uncertain economic environment."

"We remain cautiously optimistic that a transition in that environment will begin near the end of 2011.  We will continue to remain firmly focused on delivering excellent customer service, increasing value to our shareholders, and operating our company under safe and sound banking principles," Caldwell concluded.

For the second quarter of 2011, net interest income increased $531,000, or 11.6% from the same period last year.  A decrease of $369,000 in interest on deposits was the leading factor in this improvement.  Similarly, for the first six months of 2011, net interest income was $1,494,000 above the figure reported for the 2010 first half.  An increase of $524,000 in interest income coupled with a decrease in interest expense of $970,000 were the components of the shift.

The net interest margin for the three months ended June 30, 2011 was 3.64% compared to 3.49% for the same period of 2010.  For the six month periods, the net interest margin for 2011 was 3.66%, with 2010 being 3.39%.

"Our net interest margin continues to show positive movement," commented Donald L. Stacy, Chief Financial Officer.  "However, the challenges relative to consistent net interest margin improvement are far from over.  The Fed's policy of maintaining a continued low rate environment has led to aggressive pricing on the part of many of our competitors."

For the three months ended June 30, 2011, management added $700,000 to the allowance for loan losses, being only a slight increase from the $690,000 recorded for the same period the prior year.  The comparable six months figures are $1,565,000 for 2011 and $1,129,000 for 2010.  The increased loan loss provision on a year-to-date basis for 2011 was related to a higher level of charge-offs and an increase in the general allocation for loan losses.  Net charge-offs for 2011 were $759,000, or 0.20% of average loans.  The allowance for loan losses at June 30, 2011 stood at $7,027,000, or 1.82% of total loans.  At June 30, 2010, the allowance for loan losses was $5,834,000, representing 1.60% of total loans. 

Noninterest income for the second quarter of 2011 was $594,000, and continues to be tempered by certain regulatory changes including those mandated by the Dodd-Frank Act.  The first half of 2011 saw the company report noninterest income of $1,293,000, down only $1,000 from the prior year.     

Noninterest expense for the second quarter of 2011 totaled $4,292,000, an increase of $464,000, from the same period last year.  The two largest components of this increase were salaries and benefits, which was up $231,000, and loss on the sale of other real estate owned of $230,000.  The increased employee costs reflect increased headcounts, primarily related to special assets/collections, credit analysis, and regulatory compliance.  For the first half of 2011, total noninterest expense of $7,997,000 was $611,000 above the 2010 comparable period. 

Balance Sheet Growth

The company's total assets as of June 30, 2011 stood at $639.6 million, an increase of 1.2% over the $632.2 million in total assets reported at December 31, 2010.  Net loans at June 30, 2011, were $378.3 million, up $12.0 million, or 3.3%, over the $366.3 million reported at December 31, 2010.  Total deposits at the end of the second quarter 2011 were $569.7 million or 0.8% greater than the deposit level of $566.3 million at December 31, 2010.  Stockholders' equity at June 30, 2011, was $42.3 million.  Book value per share as of June 30, 2011, was $25.58.

Dividends   

During the second quarter of both 2011 and 2010, Middlefield paid cash dividends of $0.26 per share.

Middlefield Banc Corp. headquartered in Middlefield, Ohio is a multi-bank holding company with total assets of $639.6 million.  The company's lead bank, The Middlefield Banking Company, operates full service banking centers and a LPL Financial¬Æ brokerage office serving Chardon, Cortland, Garrettsville, Mantua, Middlefield, Newbury, and Orwell.  The company also serves the central Ohio market through its Emerald Bank subsidiary, with offices in Dublin and Westerville, Ohio.  Additional information is available at www.middlefieldbank.com and www.emeraldbank.com

This press release of Middlefield Banc Corp. and the reports Middlefield Banc Corp. files with the Securities and Exchange Commission often contain "forward-looking statements" relating to present or future trends or factors affecting the banking industry and, specifically, the financial operations, markets and products of Middlefield Banc Corp.  These forward-looking statements involve certain risks and uncertainties.  There are a number of important factors that could cause Middlefield Banc Corp.'s future results to differ materially from historical performance or projected performance.  These factors include, but are not limited to: (1) a significant increase in competitive pressures among financial institutions; (2) changes in the interest rate environment that may reduce interest margins; (3) changes in prepayment speeds, charge-offs and loan loss provisions; (4) less favorable than expected general economic conditions; (5) legislative or regulatory changes that may adversely affect businesses in which Middlefield Banc Corp. is engaged; (6) technological issues which may adversely affect Middlefield Banc Corp.'s financial operations or customers; (7) changes in the securities markets; or (8) risk factors mentioned in the reports and registration statements Middlefield Banc Corp. files with the Securities and Exchange Commission.  Middlefield Banc Corp. undertakes no obligation to release revisions to these forward-looking statements or to reflect events or circumstances after the date of this press release. 

  
   
MIDDLEFIELD BANC CORP. 

Consolidated Selected Financial Highlights

                         

June 30, 2011 and 2010 and December 31, 2010

     

(unaudited)

 

 

 

 

 

(unaudited)

     
Balance Sheet (period end)    

June 30,

 

 

December 31,

 

 

June 30,

     
(Dollar amounts in thousands)     2011

 

 

2010

 

 

2010      
                         
Assets                        
Cash and due from banks   $ 15,540   $ 10,473   $ 15,065      
Federal funds sold     19,364     20,162     22,152      
Interest-bearing deposits in other institutions     -     -     124      
   Cash and cash equivalents     34,904     30,635     37,341      
Investment securities available for sale     193,821     201,772     178,963      
Loans:     385,339     372,498     364,762      
Less:  reserve for loan losses     7,027     6,221     5,834      
      Net loans     378,312     366,277     358,928      
Premises and equipment     7,939     8,179     8,360      
Goodwill     4,559     4,559     4,559      
Bank-owned life insurance     8,118     7,979     7,839      
Accrued interest receivable and other assets     11,921     12,796     10,949      
Total Assets   $ 639,574   $ 632,197   $ 606,939      
                         
     

June 30,

 

 

December 31,

 

 

June 30,

     
      2011

 

 

2010

 

 

2010      
Liabilities and Stockholders' Equity                        
Non-interest bearing demand deposits   $ 58,219   $ 53,391   $ 51,118      
Interest bearing demand deposits     55,315     48,869     40,055      
Money market accounts     74,482     71,105     65,275      
Savings deposits     160,141     146,993     131,818      
Time deposits     221,588     244,893     244,829      
   Total Deposits     569,745     565,251     533,095      
Short-term borrowings     6,787     7,632     7,201      
Other borrowings     18,694     19,321     25,040      
Accrued interest and other liabilities     2,045     1,971     1,995      
   Total Liabilities     597,271     594,175     567,331      
                         
Common equity     29,485     28,429     28,201      
Retained earnings     16,712     15,840     15,504      
Accumulated other comprehensive income     2,840     487     2,637      
Treasury stock     (6,734)     (6,734)     (6,734)      
   Total Stockholders' Equity     42,303     38,022     39,608      
                         
Total Liabilities and Stockholders' Equity   $ 639,574   $ 632,197   $ 606,939      
                         
                         
                         
                         
MIDDLEFIELD BANC CORP.

Consolidated Selected Financial Highlights

June 30, 2011 and 2010
(Dollar amounts in thousands)
(unaudited)

  

    

For the Three Months Ended

 

For the Six Months Ended

      June 30,      June 30,
     

2011

 

 

2010

 

 

2011

 

 

2010

INTEREST INCOME                        
   Interest and fees on loans   $ 5,399   $ 5,299   $ 10,700    $ 10,396
   Interest-bearing deposits in other institutions     2     3     4     7
   Federal funds sold     4     12     13     23
   Investment securities                        
      Taxable interest     1,289     1,339     2,612     2,542
      Tax-exempt interest     702     647     1,400     1,239
   Dividends on FHLB Stock     25     32     51     49
      Total interest income     7,421     7,332     14,780     14,256
                         
INTEREST EXPENSE                        
   Deposits     2,004     2,373     4,041     4,858
   Short term borrowings     59     62     118     120
   Other borrowings     104     183     213     373
   Trust preferred securities     137     128     273     264
      Total interest expense     2,304     2,746     4,645     5,615
                         
NET INTEREST INCOME     5,117     4,586     10,135     8,641
                         
Provision for loan losses     700     690     1,565     1,129
                       

NET INTEREST INCOME AFTER PROVISION

                     
   FOR LOAN LOSSES     4,417     3,896     8,570     7,512
                         
NONINTEREST INCOME                        
   Service charges on deposits     416     433     844     848
   Earnings on bank-owned life insurance     66     65     139     132
   Other income     149     169     332     287
   Net securities gains (losses)     (37)     18     (22)     27
      Total non-interest income     594     685     1,293     1,294
                         
NONINTEREST EXPENSE                        
   Salaries and employee benefits     1,944     1,713     3,634     3,224
   Occupancy expense     223     217     495     493
   Equipment expense     155     204     313     402
   Data processing costs     173     172     353     415
   Ohio state franchise tax     97     134     225     270
   FDIC assessment     272     190     497     392
   Professional fees     185     188     396     380
   Loss on sale of other real estate owned     323     93     303     214
   Other operating expense     920     917     1,781     1,596
      Total non-interest expense     4,292     3,828     7,997     7,386
                         
Income before income taxes     719     753     1,866     1,420
Provision for income taxes     (1)     38     144     60
NET INCOME   $ 720   $ 715   $ 1,722   $ 1,360
                         
                         
     

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

   

For the Three Months Ended

 

For the Six Months Ended

       June 30,     June 30,
     

2011

 

 

2010

 

 

2011

 

 

2010

Per common share data                        
Net income per common share - basic   $ 0.44   $ 0.46   $ 1.10   $ 0.87
Net income per common share - diluted   $ 0.44   $ 0.45   $ 1.10   $ 0.87
Dividends declared   $ 0.26   $ 0.26   $ 0.52   $ 0.52
Book value per share(period end)   $ 25.58   $ 25.10   $ 25.58   $ 25.10
Tangible book value per share (period end)   $ 22.82   $ 22.21   $ 22.82   $ 22.21
Dividend payout ratio     56.94%     57.06%     49.36%     60.00%
Average shares outstanding - basic     1,647,771     1,570,852     1,568,168     1,568,168
Average shares outstanding -diluted     1,647,920     1,572,084     1,568,243     1,569,742
Period ending shares outstanding     1,653,660     1,577,771     1,653,660     1,577,771
                         
Selected ratios                        
Return on average assets     0.45%     0.47%     0.55%     0.46%
Return on average equity     7.22%     7.48%     8.89%     7.27%
Yield on earning assets     5.17%     5.44%     5.23%     5.44%
Cost of interest bearing liabilities     1.71%     2.15%     1.74%     2.25%
Net interest spread     3.36%     3.29%     3.49%     3.19%
Net interest margin     3.64%     3.49%     3.66%     3.39%
Efficiency (1)     70.68%     68.30%     65.82%     69.86%
Equity to assets at period end     6.61%     6.53%     6.61%     6.53%
                         

(1)  The efficiency ratio is calculated by dividing non-interest expense less amortization of intangibles by the sum of net interest

      income on a fully taxable equivalent basis plus non-interest income.

               
                         
     

June 30,

 

 

June 30,

           
Asset quality data     2011

 

 

2010            
(Dollar amounts in thousands)                        
Non-accrual loans   $ 19,155    $ 19,817            
Troubled debt restructuring     3,198     -            
90 days past due and accruing     116     236            
Non-performing loans     22,469       20,053            
Other real estate owned     2,145     1,886            
Non-performing assets   $ 24,614     $ 21,939            
                         
                         
Allowance for loan losses   $ 7,027   $ 5,834            
Allowance for loan losses/total loans     1.82%     1.60%            
Net charge-offs:                        
   Quarter-to-date   $ 358   $ 135            
   Year-to-date     759     232            
Net charge-offs to average loans                        
   Quarter-to-date     0.09%     0.04%            
   Year-to-date     0.20%     0.06%            
Non-performing loans/total loans     5.83%     5.50%            
Allowance for loan losses/non-performing loans     31.27%     29.09%